The Economic Coordination Committee (ECC) of the Cabinet has revised the procedure for the import of used vehicles under personal baggage, transfer of residence and gift schemes.
The ECC facilitated the clearance of over 1,017 vehicles stuck at ports due to payment-related issues.
A meeting chaired by the Prime Minister’s Advisor on Finance Dr. Abdul Hafeez Shaikh, on a proposal by Commerce Division, has approved the import of used vehicles under personal baggage, transfer of residence and gift schemes.
Under the new law, the payment of duties and taxes will be done out of foreign exchange arranged by Pakistani nationals themselves or local recipients producing proof of conversion of foreign remittance to local currency.
The importers have been allowed to meet any shortfall in the arrangement of required foreign remittance for payment of duties and taxes through local sources if the Pakistani rupee depreciates or the government increases the import duties and/or taxes after the receipt of remittance and before the filing of the goods’ declaration. This results in a shortfall of remitted amount vis-a-vis payable duties and taxes.
The meeting was told that the ECC’s decision will help clear up all of the 1,017 vehicles currently stuck at Karachi port because either no foreign remittance had been received or the remitted amount had been rendered insufficient due to depreciation of Pakistani rupee before the filing or goods declaration or increase in the rate of duty in the Finance Act 2019.
Previously, the schemes have been reported to be misused by commercial importers, who used to import vehicles using overseas Pakistanis passports and only around 5% of the cars were being imported by genuine overseas Pakistanis. This had led to outflows of foreign exchange from the country through Hawala/Hundi and there was a need for corrective measures to deter people from this practice.
It is to be noted that the import of used cars saw a sharp decline of 83%, in terms of value, during the first quarter (July-Sep FY20) of the current fiscal year. Following the strict measures introduced by the government to check the growing forex deficit, imports have drastically dropped.
According to the Pakistan Bureau of Statistics (PBS), import of used cars in completely built unit (CBU) condition went down to $14.69 million during July-September 2019/20 as compared with $87.21 million in the corresponding period last year